Standard to concentrate on Africa

STANDARD Bank has abandoned its strategy to be a global emerging markets player to concentrate on its investments in Africa.

The decision, announced yesterday by group CEO Jacko Maree, had been expected by analysts after reports that Standard was considering exiting the Russian market. This led to speculation that Africa's largest bank by assets and revenue has been forced by tight market conditions to review its emerging market strategy.

But Mr Maree said new strategy was more of a "refinement and tightening of strategic focus" than a complete overhaul. The review comes after the bank was last year forced to slash costs in the face of slowing revenue and rising expenses, which pushed its cost-to-income ratio to more than 61% in the year to December.

It also signals the growing influence of its 20% shareholder, the Industrial and Commercial Bank of China, which wants Standard to concentrate in Africa, now a favourite hunting ground for Chinese state companies.

"We remain the largest bank in Africa by earnings and assets, with a recognised and trusted brand, a well-capitalised strong balance sheet, and our South African base remains an ideal springboard for our expansion in Africa," said Mr Maree. "Our strategy is sound. After extensive debate, we believe that a fundamental revision of the strategy is unwarranted, but that some refinement and tightening of strategic focus is required."

He said capital expenditure outside Africa will gradually be reduced over time while more money will be spent on organic expansion on the continent.

Metropolitan Asset Management analyst Safs Narker said he was yet to be convinced the revised strategy will work.

"I think I was disappointed that they did not make a more meaningful statement on their strategy," he said.

Mr Narker also said Standard should be clear about its investment in Russian investment bank Troika Dialog, which it is believed to be on the verge of selling for a profit of about $360m.

Mr Maree said while the overall strategy remained intact, the bank no longer has the appetite to spend money on greenfield projects, or expand its footprint in foreign markets.

"We no longer have ambitions to buy or build additional domestic businesses in markets outside of Africa," he said. "However, we will connect other selected emerging markets to Africa and to each other, applying our sector expertise, particularly in natural resources, globally."

The CEO of Standard Bank SA, Sim Tshabalala, said the bank was expanding its retail franchise in Nigeria and is also building a similar venture in Angola.

It will also expand in other African countries, which are forecast to achieve higher gross domestic product growth over the next two decades, such Ghana and Kenya, he said.

"We are thin on the ground in Nigeria, particularly in the retail space, and will be building more branches and ATMs, as well as hiring more people like business bankers," said Mr Tshabalala.

Mr Maree said Africa was at the core of Standard's future.

"We will continue building robust banking systems for Chinese clients in Africa and positioning the group to service the growing trade and investment flows between China and other emerging markets," he said.

STANDARD Bank has abandoned its strategy to be a global emerging markets player to concentrate on its investments in Africa.

The decision, announced yesterday by group CEO Jacko Maree, had been expected by analysts after reports that Standard was considering exiting the Russian market. This led to speculation that Africa's largest bank by assets and revenue has been forced by tight market conditions to review its emerging market strategy.

But Mr Maree said new strategy was more of a "refinement and tightening of strategic focus" than a complete overhaul. The review comes after the bank was last year forced to slash costs in the face of slowing revenue and rising expenses, which pushed its cost-to-income ratio to more than 61% in the year to December.

It also signals the growing influence of its 20% shareholder, the Industrial and Commercial Bank of China, which wants Standard to concentrate in Africa, now a favourite hunting ground for Chinese state companies.

"We remain the largest bank in Africa by earnings and assets, with a recognised and trusted brand, a well-capitalised strong balance sheet, and our South African base remains an ideal springboard for our expansion in Africa," said Mr Maree. "Our strategy is sound. After extensive debate, we believe that a fundamental revision of the strategy is unwarranted, but that some refinement and tightening of strategic focus is required."

He said capital expenditure outside Africa will gradually be reduced over time while more money will be spent on organic expansion on the continent.

Metropolitan Asset Management analyst Safs Narker said he was yet to be convinced the revised strategy will work.

"I think I was disappointed that they did not make a more meaningful statement on their strategy," he said.

Mr Narker also said Standard should be clear about its investment in Russian investment bank Troika Dialog, which it is believed to be on the verge of selling for a profit of about $360m.

Mr Maree said while the overall strategy remained intact, the bank no longer has the appetite to spend money on greenfield projects, or expand its footprint in foreign markets.

"We no longer have ambitions to buy or build additional domestic businesses in markets outside of Africa," he said. "However, we will connect other selected emerging markets to Africa and to each other, applying our sector expertise, particularly in natural resources, globally."

The CEO of Standard Bank SA, Sim Tshabalala, said the bank was expanding its retail franchise in Nigeria and is also building a similar venture in Angola.

It will also expand in other African countries, which are forecast to achieve higher gross domestic product growth over the next two decades, such Ghana and Kenya, he said.

"We are thin on the ground in Nigeria, particularly in the retail space, and will be building more branches and ATMs, as well as hiring more people like business bankers," said Mr Tshabalala.

Mr Maree said Africa was at the core of Standard's future.

"We will continue building robust banking systems for Chinese clients in Africa and positioning the group to service the growing trade and investment flows between China and other emerging markets," he said.

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